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PERENNIAL REAL ESTATE HOLDINGS LIMITED
Annual Report 2015
NOTES TO THE FINANCIAL STATEMENTS
3 SIGNIFICANT ACCOUNTING POLICIES
(continued)
3.9 Impairment
(continued)
(i)
Non-derivative financial assets (continued)
Associates and joint ventures
An impairment loss in respect of an associate or joint venture is measured by comparing the recoverable amount of
the investment with its carrying amount in accordance with note 3.9(ii). An impairment loss is recognised in profit or
loss. An impairment loss is reversed if there has been a favourable change in the estimates used to determine the
recoverable amount.
(ii)
Non-financial assets
The carrying amount of the Group’s non-financial assets, other than investment properties, properties under
development, and inventories are reviewed at each reporting date to determine whether there is any indication of
impairment. If any such indication exists, then the asset’s recoverable amount is estimated. For goodwill and
intangible assets that have indefinite useful lives or that are not yet available for use, the recoverable amount is
estimated each year at the same time. An impairment loss is recognised if the carrying amount of an asset or its
related cash-generating unit (“CGU”) exceeds its estimated recoverable amount.
The recoverable amount of an asset or CGU is the greater of its value in use and its fair value less costs to sell.
In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax
discount rate that reflects current market assessments of the time value of money and the risks specific to the asset
or CGU. For the purpose of impairment testing, assets that cannot be tested individually are grouped together into
the smallest group of assets that generates cash inflows from continuing use that are largely independent of the
cash inflows of other assets or CGUs.
Subject to an operating segment ceiling test, for the purposes of goodwill impairment testing, CGUs to which
goodwill has been allocated are aggregated so that the level at which impairment testing is performed reflects the
lowest level at which goodwill is monitored for internal reporting purposes. Goodwill acquired in a business
combination is allocated to groups of CGUs that are expected to benefit from the synergies of the combination.
The Group’s corporate assets do not generate separate cash inflows and are utilised by more than one CGU.
Corporate assets are allocated to CGUs on a reasonable and consistent basis and tested for impairment as part of
the testing of the CGU to which the corporate asset is allocated.
Impairment losses are recognised in profit or loss. Impairment losses recognised in respect of CGUs are allocated
first to reduce the carrying amount of any goodwill allocated to the CGU (group of CGUs), and then to reduce the
carrying amounts of the other assets in the CGU (group of CGUs) on a
pro rata
basis.
An impairment loss in respect of goodwill is not reversed. In respect of other assets, impairment losses recognised in
prior periods are assessed at each reporting date for any indications that the loss has decreased or no longer exists.
An impairment loss is reversed if there has been a change in the estimates used to determine the recoverable
amount. An impairment loss is reversed only to the extent that the asset’s carrying amount does not exceed the
carrying amount that would have been determined, net of depreciation or amortisation, if no impairment loss had
been recognised.
Goodwill that forms part of the carrying amount of an investment in an associate or a joint venture is not recognised
separately, and therefore is not tested for impairment separately. Instead, the entire amount of the investment in an
associate or a joint venture is tested for impairment as a single asset when there is objective evidence that the
investment in an associate or a joint venture may be impaired.
